Both-To-Blame Clause

Both-To-Blame Clause

Summary of Both-To-Blame Clause

A provision in an ocean bill of lading that addresses the responsibilities of the vessel to the cargo interests in the event of a collision at sea. The clause arises from an anomaly of maritime law whereby a vessel involved in a collision is exempted from liability to its own cargo (as provided in the Harter Act and Carriage of Goods by Sea Act) but enjoys no such immunity from liability for losses suffered by cargo aboard the other colliding ship. When collision is attributable to mutual fault, damages are divided equally between the vessels. For example, if Vessel A suffers $1 million in losses (including cargo), and Vessel B suffers $500,000, then Vessel B will pay Vessel A $250,000 so that each ship will bear one-half of the aggregate loss arising from collision. It must be remembered that Vessel A is exempt from legal obligation for any loss suffered by the cargo it carried; Vessel B is not exempt for losses suffered by Vessel A's cargo and will throw this liability into the pot to be shared with Vessel A, thereby forcing Vessel A to subsidize Vessel B's obligation to the cargo on A, even though A is not liable for the loss to the cargo it carried.

In response to this apparent contradiction, ocean carriers have included in their bills of lading a clause whereby the cargo indemnifies the carrying vessel for any loss or expense arising from its contribution to the other vessel in satisfaction of that ship's liability for cargo damage. Such both-to-blame clauses vary from carrier to carrier, but the following is representative:

If the vessel comes into collision with another vessel as a result of the negligence of the other vessel and any act, negligence, or default of the Master, mariners, pilots, or servants of the carrier in the navigation or in the management of the vessel, the Merchant will indemnify the carrier against all loss or liability to the other non-carrying vessel or her owner insofar as such loss or liability represents the loss or damage to or any claim whatsoever of the owner of the said goods paid or payable by the other non-carrying vessel or her owner to the owner of said cargo and set-off or recouped or recovered by the other or non-carrying vessel or her owner as part of his claim against the carrying vessel or carrier. The foregoing provisions shall also apply where the owner, operator or those in charge of any vessels or objects other than, or in addition to, the colliding vessels or objects are at fault in respect of a collision or contact.

The effects of a both-to-blame clause in a bill of lading are: cargo would sue the vessel with which its own ship collided, collecting full damage; the noncarrying vessel would insert the cargo settlement so obtained into its bill of damages and costs, thereby deriving a 50 percent reimbursement from the colliding vessel; and the carrying vessel would sue the cargo for one-half its recovery from the noncarrying ship.

In 1952, in the case of the United States vs. Atlantic Mutual Insurance Company, the Supreme Court held that in the absence of specific statutory authority, a carrier might not relieve himself of responsibility for damages. There being no such specific authority granted to ocean carriers under the Harter Act nor under the Carriage of Goods by Sea Act, nor under other legislation, the both-to- blame provisions were declared invalid for use in the foreign and domestic waterborne commerce of the United States.

It should be noted that the both-to-blame clause continues to be included in bills of lading, despite the nullifying effect of the Atlantic Mutual case, largely on the contingency that a carrier might be able to invoke the clause in a receptive foreign jurisdiction.

(Main Author: William J. Miller)


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